>Socialist Planning -- Liberation from the Market
>
>The following is written by the Maoist political economist Raymond Lotta.
>It is excerpted from a larger discussion on http://2changetheworld.info
>where Ray posted a series of comments called "Socialist planning vs.
>Market Socialism."
>
>Look, we’re not simply talking abstract models here. In China during the
>Maoist years (1949-76), one-quarter of humanity was creating a new
>society, free from exploitation and oppression. And it was a society in
>which a planned economy was quite functional.
BS. I lived in China during that period and saw a lot of oppression.
>“Command economy.” It’s interesting, because the term was coined by
>bourgeois opponents of socialist economics. If what people mean by
>“command economy” is that a bunch of bureaucrats just issue arbitrary
>orders and directives, without any regard for the objective requirements
>of social production, it’s an absurd proposition. If economies were run
>according to the whims or best intentions of bureaucrats, they would
>indeed fall apart. Economies are complex phenomena that obey certain laws.
>
>In this era of world history, economic development will be guided by one
>of two economic mechanisms: either by the law of value, with the
>production of exchange value and surplus value dominating production and
>the labor process; or by conscious social planning carried out to in
>accordance with the interests of the world revolution.
Well, there is such a thing as transaction cost economics (TCE) of which the writer seems blissfully oblivious. The basic aTCE argument goes as follows: there is a cost to every business transaction carried under a free market condition (e.g. surveying the market, drafting and enforcing contracts, dealing with contingencies, etc.); the more complex the economy, the more transaction it requires, and thus the higher the transaction cost; transaction cost can be substantially reduced, inter alia, by "organizational hierarchies" (TCE lingo for planning; ergo - in complex economies large monopolistic organizational structures can be more efficient than free markets.
>Capitalism is guided by the “invisible hand” of profit, working
>spontaneously and anarchically behind people’s backs through the market.
And where exactly such capitalism exist?
>Socialism is guided by the “visible hand” of revolutionary politics. On
>the basis of social ownership and social planning, the masses will be
>consciously taking hold of the economy. The objective requirements of
>social production, such as the needed proportionalities between different
>economic sectors, will be consciously grappled with.
Who are the masses and how exactly would they "take hold of the economy"?
>Under socialism, only part of the national income created by the laboring
>people will be distributed directly as wages and earnings.
>
>The bulk of the surplus will be deployed by the proletarian state for:
>
>1. accumulation funds to expand production capabilities, transport,
>infrastructure, etc.,
>
>2. cultural, educational, defense, and state administration sectors;
>
>3. material reserves to prepare for wars, shortages, etc.;
>
>4. social wage for medical and various accident and retirement needs of
>the working people:
>
>5. support for the world revolution.
And how is that differenetr from the current version of the US system
>The social surplus is both directly and indirectly serving the interests
>of the proletariat and masses of people.
>In looking at things this way, we begin to establish a yardstick for
>understanding what this surplus is all about, whether there is
>exploitation or not. Bob Avakian speaks to this very concisely:
>
>“The decisive question is not whether a surplus will be produced, nor its
>size, nor the most `efficient’ means for producing the greatest surplus
>but whether the surplus will be produced through means, guided by
>principles, and utilized in such a way to make the greatest possible
>strides at every point toward the revolutionary transformation of society
>and the world, above all.” (from an unpublished correspondence).
>
>If you have a society where there is formal state ownership and state
>planning, but where the masses are not being relied on and where people in
>leading positions have grown divorced from and are lording it over the
>masses—if society is not moving in the direction of overcoming the
>inequalities of class society--than you don’t have socialism and socialist
>planning, no matter what the rulers call it.
>
>The mechanism guiding development will be the law of value serving
>bureaucrat capitalism. This was in fact the situation in the Soviet Union
>from 1956 until 1990-91. And part of the cause of the Soviet system’s
>collapse in 1991 was the fact that the state-capitalist economy had
>entered into serious crisis.
>
>But the situation was totally different in China when Mao died in 1976.
>China was socialist, and there was no crisis or breakdown in China’s
>socialist economy. The restoration of capitalism did not happen because
>socialism somehow "failed" -- and particularly not because the socialist
>economy had somehow failed to meet people's needs.
>What did happen in October 1976 was that Deng Xiaoping led a reactionary
>coup and a new exploiting class put China on the capitalist road. It’s not
>that there weren’t problems in China’s economy during the Mao years. But
>the fundamental problem in the eyes of Deng and Co. was socialism: The
>masses were running things and the openings for capitalism were being blocked.
>
>B. Maoist China’s Economic Successes.
>I do have to set the record straight: Maoist China had great economic
>successes.
>The masses constructed a comprehensive, integrated, and independent
>agricultural-industrial base. During the years of the Cultural Revolution
>industrial growth averaged 10 percent a year.
>
>Living standards greatly improved. The food problem was solved; a growing
>assortment of consumer goods was being produced; housing needs were met;
>and the revolution created the most egalitarian health care system in the
>world (that’s according to the World Bank!). Life expectancy in China
>increased from about 35 years in 1949 to 65 years in the mid-1970s.
>Shanghai had a lower infant mortality rate in 1975 than did New York City!
>None of this would have been possible without socialist planning and
>economic coordination.
>
>And we’re not talking here about some giant welfare state.
>
>These advances were made on the basis of social mobilization and mass
>political awareness. People were taking up and debating major issues of
>politics and culture in factories and communes. It was in the period of
>the Cultural Revolution that Mao summarized the approach with the slogan,
>“Grasp Revolution, Promote Production.”
>
>New forms of worker control and revolutionary management were being
>developed and struggled out within factories and workplaces. Barriers
>between workplaces and between people working in agriculture and people
>working in industry were being broken down.
>
>Okay, but isn’t it true that more consumer goods are available in China
>today than under Mao? Yes. Once the Maoists were overthrown, and China was
>integrated into the world capitalist market, the variety and quantity of
>consumer goods expanded. The problem is that the people who mainly can
>afford these things are from new privileged strata—while millions of
>ordinary Chinese are working in sweatshops, producing consumer goods that
>they cannot afford for markets in the imperialist countries. And talk
>about a thriving market: a major cause of the AIDS epidemic in China’s
>countryside is the sad fact that today, with poverty and inequality
>spreading, poor and landless peasants are selling their blood in order to
>survive.
>
>C. How Socialist Planning Works (And It Really Has Worked!)
>When people talk about “command economy,” they usually mean two things.
>First, there is the idea of people on top attempting to “micro-manage”
>everything—from the leading ministries all the way down to the smallest of
>enterprises.
>
>Second, there is the idea that people are simply being barked orders at
>and moved around like pieces on a chessboard.
>
>That’s not how things worked in Maoist China. Mao and the Chinese
>revolutionaries had learned from the negative features of the Soviet
>experience. Under Stalin, there was too much top-down, vertical control
>over the economy. Mao said this stifled popular initiative He also said
>this approach was unworkable--because there is no way that a complex and
>diverse economy could be managed on the basis of detailed commands from
>the top.
>
>1) Mao saw planning as involving centralized leadership and coordination,
>and decentralized responsibility and initiative. And leadership is not
>just a matter of who is leading—but what line and policies are leading,
>what lines leading people are carrying out and fighting for.
>
>In Maoist China, the socialist plan incorporated clear political,
>economic, and social priorities. These had to do with developing
>agriculture and feeding people, developing a regionally and
>technologically balanced industrial system, overcoming the
>city-countryside divide, revolutionizing management, organization, and the
>labor process.
>
>A revolution has to identify key needs and priorities. Are you going to
>work to support revolution in other countries? Do you build baseball
>stadiums or hospitals first? Where do you focus efforts to improve
>transport—on private autos or mass transit?
>
>You need centralized direction over the output levels of major products.
>You need to be able to mobilize resources for priority needs and sectors.
>You need society-wide coordination of some forms of technology (power and
>communication systems, for instance). Centralized coordination is also
>needed because economic activities at any given level have economic,
>social, and environmental effects at other levels of society. And people
>at the “ground level” cannot anticipate all such consequences, even as
>they act with the interests of the whole society and world in mind.
>
>The national plan in revolutionary China projected the principal
>requirements of the provinces, but substantial powers of planning and
>administration were delegated to the provinces and localities. The number
>of materials placed under central allocation was relatively low compared
>to the situation in the Soviet Union during the Stalin years.
>
>Provinces and local areas assumed responsibility for supplying key goods
>to enterprises within their areas of responsibility.
>
>A plan can’t be rigid. Targets should be attainable and flexible. If
>economic or political conditions change, if new understanding is gained,
>then adjustments may have to be made—and that should built in to the
>planning system. Another point is that planning needs to unfold within
>“multiple time horizons”: longer term, like 5 years; and shorter-term,
>like one year.
>
>One of the big breakthroughs in planning methods in Maoist China was the
>practice of “two track” planning. You had industrial ministries drawing up
>plans to meet the needs and requirements of particular branches of
>production. This was one track. But the main track was “area planning.”
>
>Local areas took principal responsibility for basic production decisions
>and allocation of resources. Local plans were drawn up with a keen sense
>of local capabilities and resources, and with a concern for issues of
>pollution, population density, ways in which residential areas could be
>developed into new kinds of units of collective economic and social life.
>
>2) How were plans worked out?
>
>I wrote about this in an essay included in the book Maoist Economics and
>the Revolutionary Road to Communism. The overall process was described as
>the “two ups and the two downs.”
>
>An initial plan, based on mass experience flowing upward and the overall
>needs of advancing the revolution, would be formulated and sent down
>through all administrative and production channels. It was then put to
>mass review, with suggestions getting transmitted upward. Then a final
>modified plan would be sent back down.
>
>The goals of the plan were the object of mass discussion and evaluation,
>according to the overall and guiding political objectives. Where should
>society be heading and how should we be getting there? There was the
>principle of overcoming the “three great differences”—overcoming the gaps
>and inequalities between industry and agriculture, town and country, and
>mental and manual labor.
>
>A plan is not just some “input-output” cookbook, or some grandiose set of
>marching orders. A socialist plan, first and foremost, serves and
>concentrates the political and social objectives of the revolution.
>
>One of the primary purposes of a socialist plan is to give people a deep
>and accurate understanding of the conditions of society and of people’s
>real interrelations with one another—precisely what the market with its
>mystification can never do. The masses need to have wide knowledge of the
>whole system: its economic laws, its contradictions, and its goals.
>
>A socialist plan is worthless and unworkable if the masses are not
>politically won to it—because it is the masses that have to grasp and act
>on it; it is the masses who have to define and carry out
>responsibilities
to do that with the interests of the whole society, the
>whole revolution, and the whole world in mind. This is why planning has to
>be linked with mass social movements and with political campaigns focusing
>attention on the key issues confronting society.
>
>In sum, the planning system has to rely on collective responsibility.
>Socialist planning is the practice of the “mass line”: carried out in
>accordance with the interests of the masses and on the basis of mobilizing
>the masses.
>
>D. The RCP Draft Programme and Commodity Relations.
>The recent Draft Programme of the Revolutionary Communist Party,USA
>explains that commodity-money relations cannot be immediately overcome
>under socialism. They will persist for some time. [See the DP section: The
>New Socialist Economy, Part 1: Grasp Revolution, Promote Production]
>
>The law of value-- according to which the value of things produced is
>equivalent to the socially necessary labor time required to produce
>them—will play a role, a secondary role, but a role nonetheless, in the
>socialist economy. Socialist production will still have features of
>commodity production. A commodity has two aspects. It has use-value—it
>satisfies a human want; and it has exchange value--it can be exchanged for
>other commodities according to the value it contains.
>
>It will be necessary for the socialist economy to undertake cost
>accounting, as expressed in value/money/price terms, in order for the
>planning system to estimate production costs and to measure, compare, and
>promote efficiency. But what gets produced will be determined by social
>need, and workplaces will be organized on the basis of politics in
>command, not around profit or efficiency first. A price system will be
>used to serve socialist exchange. A substantial portion of consumer goods
>will still be purchased by individuals in consumer markets. But these
>markets will be strictly regulated and controlled, so that social need is met.
>
>Here’s how Maoists come down on these issues: Commodity production will
>exist in various forms and exchange through money will exist in various
>degrees under socialism; and they will be utilized within the planned
>socialist economy. But these phenomena are not neutral.
>
>Where market-money-price relations exist in any form, there are elements
>and seeds of the negative things I’ve been talking about:
>
>· economic differentiation,
>· social polarization,
>· people and groups being pitted against each other,
>· individuals and units seeking to maximize income instead of the social good,
>· and, in the ideological realm, the spirit of narrow calculation and
>selfishness.
>
> From the standpoint of where humanity has to go, these relations are
> defects of the new society.
>
>But that very judgment will be contested. There’s going to be class
>struggle in socialist society over whether to perpetuate and expand these
>relations and restore exploitation; or to monitor, restrict, and transform
>them, and to continue the revolution to move society forward and beyond
>commodities, money, the market, and the mind-set of “me first.”
>
>B. Socialist Principles and Policies
>People ask how plans would decide such issues of light and heavy industry,
>where to focus research, what consumer goods would get produced, etc.
>
>Would these things be voted on? The answer is no.
>
>For one thing, certain common needs (housing, healthcare, etc.) are not
>such a mystery. For another, it’s an impractical way of running an economy
>and society. And one has to ask, according to what standards and
>preferences would people be voting?
>
>But planners must not become divorced from the masses, and the planning
>system has to involve deep investigation among the masses and feedback
>from the masses. On the one hand, you need society-wide priorities and
>direction. On the other hand, you also need society-wide debate,
>education, and struggle, both over the immediate and the long-term goals
>of the revolution. This is essential in order for the masses to be relied
>on to solve problems and to transform society through their own efforts.
>The party has tried to learn from this.
>
>The Draft Programme lays out an approach to economic development and
>indicates specific policies. I want to highlight a few of the most
>important of these principles and policies.
>
>1) “Raising the bottom up.” The new proletarian state must take special
>measures for “raising the bottom up.” This applies to rebuilding and
>improving the ghettoes and barrios, the distribution of social goods and
>services (like health care centers), and giving preference in development
>to less developed and more backward areas. The whole society, people from
>every stratum, will be mobilized to overcome the inequalities left over
>from the old society.
>
>2) “Socialist sustainable development.” Step-by-step efforts will be
>undertaken to develop technology, industrial-agricultural systems, and
>infrastructure that are economically productive, ecologically rational,
>and socially just. The new society must promote the outlook that humanity
>is the caretaker of the planet for present and future generations.
>
>3) "Creating new urban-rural relations." The size of cities will be
>consciously reduced; new construction and economic-social planning will
>integrate work, residence, and community; the characteristic mode of
>suburban development will be halted and reversed; people will live in
>closer proximity to agricultural land and agricultural production.
>
>4) "Reconfiguring a formerly imperialist economy". The new socialist
>economy will shatter the old society’s former international economic
>relations. It will immediately cut links and ties with institutions like
>the World Bank and WTO and expose their crimes and wage struggle against
>such institutions. The proletariat in power will utilize the productive
>forces it inherits first and above all to advance the world revolution
>toward the aim of overcoming all exploitative and unequal relations in the
>world.
>
>Where are these principles coming from?
>
>· They represent the distillation of socialist experience and the
>application of the lessons of that experience to the concrete conditions
>of U.S. society.
>· They flow from concrete analysis of what it will take to overhaul the
>economic structure and social fabric of U.S. capitalism.
>· They incorporate the insights of various social movements and
>oppositional social theory.
>· They reflect the just demands and highest aspirations of the struggling
>masses in U.S. society.
>· They correspond to the needs and interests of the oppressed of the
>world—who want U.S. imperialism off their backs.
>
>The RCP is promoting and popularizing these principles today. It is
>rallying people to a revolutionary cause and to a revolutionary struggle
>capable of ultimately putting them into practice.
>
>Under socialism, you need core principles as guideposts for economic
>development and as yardsticks against which to evaluate progress and
>backsliding. These kinds of principles set out in the Draft Programme will
>become the object of mass study, discussion, and debate. They will be
>taken up by the masses and used to transform society. New knowledge and
>understanding will be gained.
>
>But this will not be taking place in a vacuum. Such principles will come
>under attack by new privileged forces within socialist society and the
>state who stand for very different economic priorities and social
>direction. This is another reason that you need revolutionary leadership:
>to focus up key questions confronting society and to politically arm and
>organize the masses so they can wage complicated class struggles to defend
>and advance the revolution
>
>
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S. Wojciech Sokolowski, Ph.D. Institute for Policy Studies Johns Hopkins University 3400 N. Charles St. Baltimore, MD 21218-2696, USA voice: +410 516-4056 fax: +410 516-7818/8233 email: sokol at jhu.edu